Market concentration in Finnish construction market gets a shot in the arm from new players and one big merger

The comfortable cartel arrangements of the Finnish construction sector has seen plenty of new entrants these last few years as real competition has started to shake the apple trees.

Some of the big players have been caught out for price fixing and have had to pay huge fines. At the same time the construction market has seen remarkable changes as new companies have entered the market with leaner and more agile approaches to renovation and building.

These new companies have grown fast and two have gone public – Lehto and Consti. Both are involved in introducing more efficient project management processes into, what has been until recently, a rather traditional sector dominated by the likes of Skanska, NCC, YIT and SRV. There is hardly any difference in the quality or price of new residential buildings and these oldies are sitting on huge land banks in order to keep the prices of new-builds high.

Another smaller private company, Fira, has also raised its visibility and have set about to deal with the sector shortcomings like wasteful building material management, inefficient labor management, and they have sharply rebuked illegal employment practices.

All three of the above companies have invested heavily in time and material management.

Other companies, like Delete, have concentrated on efficient processes for demolition, demolition and construction material waste management, and project site clean-ups before new construction starts.

An then there is the big merger announced this week which is a result of the above new competition and the hefty cartel fines (levied on Lemminkäinen and a few others) that have forced Lemmikäinen and YIT to merge under the brand of YIT.

Hopefully, all of these movements will result in lower prices, higher quality and an improved competitive situation in what has been a market dominated by 4 big companies.

Another important contribution is that these newly developed companies may support stronger efforts in the export markets, where Finnish construction companies have been largely absent these last 2 decades.

Some real progress has also been seen with the introduction of large residential, commercial and public buildings using wood as the main building material. In a country covered almost entirely with forest this development is actually decades behind Austria, Germany and Switzerland.

Readers will recall the sad state of many public buildings where project mis-management and where air pollution from air borne mould has resulted in huge extra costs for taxpayers. Schools and hospitals have had to be closed for massive renovation as a result of these traditional companies not adhering to proper building standards either because they did not care or because of cutting corners.

Read other news on the city site of Helsinki.

finnishnews
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